20111103 1044 Global Market Related News.

Asian Stocks Drop as Europe Stops Greek Aid on Vote, Fed Cuts U.S. Outlook (Source: Bloomberg)
Asian stocks declined as European leaders withheld aid to Greece after the coutnry said it will hold a referendum on a bailout package and as the U.S. Federal Reserve cut its forecast for the world’s biggest economy. Commonwealth Bank of Australia, the nation’s biggest lender, fell 1.2 percent in Sydney on speculation a default by Greece will threaten bank earnings. Rival Australia & New Zealand Banking Group Ltd. fell 1.3 percent in Sydney after posting earnings that missed estimates. LG Electronics Inc., the world’s third-biggest mobile phone maker that gets about 30 percent of sales from North America, slumped 7.3 percent amid speculation the company may sell new shares. The MSCI Asia Pacific Excluding Japan Index slipped 0.9 percent to 414.49 as of 8:55 a.m. in Hong Kong. The measure gained 13 percent last month, the most since May 2009, as Europe appeared to be closing in on a deal to contain its debt crisis, reports showed the U.S. economy grew faster and China hinted at easier monetary policy.

U.S. Stocks Rise as Federal Reserve Says It May Act to Safeguard Recovery (Source: Bloomberg)
U.S. stocks advanced, rebounding from a two-day drop in the Standard & Poor’s 500 Index, as the Federal Reserve said economic growth strengthened and it is prepared to take action if needed to safeguard the recovery. Gauges of commodity and financial shares had the biggest gains in the S&P 500 among 10 industries, rising at least 2.2 percent. Bank of America Corp. (BAC), Chevron Corp. (CVX) and Alcoa Inc. (AA) rallied more than 2.4 percent. MasterCard Inc. (MA) jumped 7 percent as profit beat analysts’ estimates. MF Global Holdings Ltd. tumbled 79 percent in its first day of over-the-counter trading after the futures brokerage filed for bankruptcy, prompting the New York Stock Exchange to delist the shares. The S&P 500 increased 1.6 percent to 1,237.90 as of 4 p.m. New York time. The benchmark gauge for American equities fell 5.2 percent over the previous two days. The Dow Jones Industrial Average added 178.08 points, or 1.5 percent, to 11,836.04 today.

Euro, Asia Stocks Fall as EE Leaders Withhold Aid (Source: Bloomberg)
The euro weakened to near a three- week low against the dollar and Asia stocks dropped after European leaders cut off aid payments to Greece before a referendum on a bailout agreement. The 17-nation euro dropped 0.5 percent to $1.3676 as of 8:23 a.m. in Hong Kong. New Zealand’s dollar sank 1.2 percent to 78.21 U.S. cents after the nation’s jobless rate unexpectedly increased. The MSCI Asia Pacific excluding Japan Index slid 0.9 percent. Standard & Poor’s 500 Index futures fell 0.9 percent. Oil declined 0.6 percent to $91.96 a barrel in New York. German and French leaders withheld 8 billion euros ($11 billion) and warned Greece will surrender all European aid if it votes against a bailout package agreed only last week. European Central Bank President Mario Draghi will chair a meeting of the bank’s governing council for the first time. Federal Reserve Chairman Ben S. Bernanke said yesterday unemployment is still “far too high” and the Fed may take more steps to boost growth.

European Stocks Rally, Snapping Three Days of Declines; Randgold Advances (Source: Bloomberg)
European stocks rose, snapping the biggest three-day drop in almost two months, as U.S. companies hired more workers than forecast and Federal Reserve policy makers raised their assessment of the economy in a statement at the close of trading. Randgold Resources Ltd. (RRS) surged to a record after forecasting a 22 percent increase in gold output next year. Rio Tinto Group surged 3.8 percent, leading a rally in commodity companies. Lloyds Banking Group Plc (LLOY) slid 4.4 percent as Chief Executive Officer Antonio Horta-Osorio took a leave of absence following medical advice. The Stoxx Europe 600 Index advanced 0.9 percent to 237.22 at the close of trading, after swinging between gains and losses at least 15 times. The gauge had retreated 5.8 percent over the previous three days as Greek Prime Minister George Papandreou called a referendum on the nation’s latest bailout package, spurring concern that a rejection of the measures may push the country into default.

German Stocks Advance; Metro, Hugo Boss Lead Gains in Frankfurt (Source: Bloomberg)
German stocks advanced, with the benchmark DAX Index (DAX) snapping two days of declines, as European leaders prepared to tell Greece there is no alternative to budget cuts imposed in the bailout plan. MAN SE rose 4.9 percent after it reiterated its sales forecast with all its divisions reporting higher third-quarter orders. Metro AG (MEO) added 1.4 percent amid speculation that Germany’s largest retailer may sell its Kaufhof unit. Hugo Boss AG (BOS) gained 1.2 percent as third-quarter net income rose. The DAX advanced 2.3 percent to 5,965.63 at the close in Frankfurt. The gauge has still fallen 21 percent from this year’s high on May 2 amid concern global economic growth is slowing and policy makers are struggling to contain Europe’s debt crisis. The broader HDAX Index (HDAX) climbed 2.1 percent today. The DAX fell 5 percent yesterday after Greece’s government called a referendum on its latest bailout package.

Bernanke: More Stimulus ‘on the Table’ (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke said unemployment is still “far too high” and the Fed may take further steps to boost growth, such as buying mortgage bonds or changing the way it communicates its policy goals to the public. Additional stimulus “remains on the table,” Bernanke said today at a press conference in Washington, declining to specify conditions that would prompt a move. “While we still expect that economic activity and labor market conditions will improve gradually over time, the pace of progress is likely to be frustratingly slow.” Bernanke spoke after the policy-setting Federal Open Market Committee said the economy picked up in third quarter and repeated its statement from September that there are “significant downside risks” to the outlook. Officials kept policy unchanged, saying they would lengthen the maturity of the Fed’s bond portfolio and hold the benchmark interest rate near zero through at least mid-2013 if unemployment remains high and the inflation outlook is “subdued.”

Bernanke Says Mortgage-Backed Securities Purchases Are ‘a Viable Option’ (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke said additional purchases of mortgage-backed securities are a “viable option” if the state of the economy warrants further easing. “The housing sector is a very important sector,” Bernanke said today at a press conference in Washington after a meeting of the Federal Open Market Committee. Adding to mortgage-bond holdings is “certainly something we would consider if conditions” are appropriate. The policy-setting FOMC today said “economic growth strengthened somewhat in the third quarter,” while also saying “significant downside risks” remain to the outlook. Officials left unchanged their plans to lengthen the maturity of the Fed’s bond portfolio and to keep the target federal funds rate near zero through at least mid-2013 as long as unemployment remains high and the inflation outlook remains “subdued.”

Fed Says Economy Has Picked Up While Still Detecting ‘Significant’ Risks (Source: Bloomberg)
Federal Reserve policy makers said the economy has picked up while “significant downside risks” remain, and they refrained from taking any additional steps to ease monetary policy. Fed officials also lowered their economic-growth projections compared with June and said the unemployment rate will decline at a slower pace. Fed Chairman Ben S. Bernanke, in a press briefing, said the pace of improvement is likely to be “frustratingly slow” and that the central bank made no decisions about giving more information on its policies through public communications. Policy makers led by Bernanke may be waiting to see if unconventional policy steps from their last two meetings help the expansion gain strength before embarking on new initiatives. While the economy grew last quarter at the fastest pace in a year, that is still insufficient to push down the unemployment rate, and officials have said the U.S. remains vulnerable to shocks from the European debt crisis.

Fed Cuts Outlook for 2012, Sees 8.6% Jobless (Source: Bloomberg)
Federal Reserve officials lowered their outlook for U.S. economic growth in 2012 and forecast that unemployment will average from 8.5 percent to 8.7 percent in the final three months of next year. The forecasts were released after the Federal Open Market Committee today acknowledged economic growth “strengthened somewhat” in the third quarter while also citing “continuing weakness” in labor markets and “significant downside risks” to the economic outlook. The committee left unchanged its plans to lengthen the maturity of its bond portfolio and maintain its mortgage-backed securities investments, and keep the federal funds rate in a range of zero to 0.25 percent until mid-2013. Chicago Fed President Charles Evans dissented in favor of “additional policy accommodation.”

Fed Officials May Prepare Ground for Further Bond Purchases, Survey Shows (Source: Bloomberg)
Federal Reserve officials are probably engineering a third round of large-scale asset purchases, while they are unlikely to announce a decision today, according to economists in a Bloomberg News survey. Sixty-nine percent of those surveyed say Chairman Ben S. Bernanke will embark on a third round of quantitative easing, or QE3, with a plurality of 36 percent predicting the move in the first quarter of next year, according to the poll of 42 economists from Oct. 26-31. “We are becoming increasingly persuaded that QE3 is coming, this time focused on purchases of mortgage-backed securities,” said Dana Saporta, U.S. economist at Credit Suisse in New York. “The best guess is at this meeting they’ll try to build some consensus around the idea and lay the groundwork for eventual purchases.”

U.S. Companies Add More-Than-Expected 110,000 Workers in October, ADP Says (Source: Bloomberg)
Companies added workers in October, easing concern the job market is stagnating in the third year of the U.S. recovery, according to a private report based on payrolls. The 110,000 increased followed a revised 116,000 gain the prior month, Roseland, New Jersey-based ADP Employer Services said today. The median forecast of economists surveyed by Bloomberg News called for a advance of 100,000. A pickup in private hiring is needed to help reduce unemployment and boost consumer spending, which accounts for about 70 percent of the economy. Businesses added 125,000 jobs in October and the jobless rate was 9.1 percent for a fourth straight month, economists in a Bloomberg survey projected ahead of a Labor Department report Nov. 4.

‘Too Soon’ to Discuss China Buying More EFSF: Zhu (Source: Bloomberg)
It’s “too soon” for China to discuss further bond purchases from Europe’s revamped rescue fund, Vice Finance Minister Zhu Guangyao told reporters in Cannes, France, on the eve of a summit of world leaders. While there are proposals to bolster the European Financial Stability Facility, “there are no concrete plans yet so it’s too early to talk about further investments in these tools,” Zhu said today. Zhu said the rescue fund, already part of China’s portfolio, is an “important tool” to address the sovereign debt crisis. European Union leaders agreed to boost the 440 billion-euro ($605 billion) fund’s firepower to 1 trillion euros last week, as part of a broader crisis-fighting package that aimed to shore up banks and provide new aid to Greece.

Korean Won Slumps, Bonds Advance as Greek Vote Fuels Concern Over Default (Source: Bloomberg)
South Korea’s won fell and bonds advanced for a fourth day on concern next month’s Greek referendum will push the nation to the verge of default, sapping demand for riskier assets. German Chancellor Angela Merkel and French President Nicolas Sarkozy withheld 8 billion euros ($11 billion) of assistance yesterday on the eve of a Group of 20 summit, warning it will surrender all European aid if Greece votes against a bailout package. Federal Reserve Chairman Ben S. Bernanke said the Fed may take further steps to boost growth, after the policy-setting Federal Open Market Committee. “Players are reacting more to uncertainties surrounding Greek referendum than Bernanke’s comments on supporting the economy,” said Ryoo Hyun Jung, chief currency dealer in Seoul at Citibank Inc. “Most of Bernanke’s comments were within expectations, and not enough to stoke risk appetite.”

Greece to Determine Euro Membership in Vote (Source: Bloomberg)
European leaders cut off aid payments to Greece and said a referendum in five weeks will determine whether the debt-strapped nation becomes the first to exit the 17-country euro area. Crisis talks ended in the French resort of Cannes late yesterday with German Chancellor Angela Merkel and French President Nicolas Sarkozy withholding 8 billion euros ($11 billion) of assistance and warning Greece it will surrender all European aid if it votes against a bailout package agreed upon only last week. “The referendum will revolve around nothing less than the question: does Greece want to stay in the euro, yes or no?,” Merkel told reporters. Sarkozy said Prime Minister George Papandreou’s government won’t get a “single cent” of aid if voters reject the plan.

Unemployment in Germany Unexpectedly Increases for First Time in Two Years (Source: Bloomberg)
German unemployment unexpectedly rose for the first time in more than two years in October and manufacturing contracted as pessimism mounted among businesses in Europe’s largest economy. The number of people out of work rose a seasonally adjusted 10,000 to 2.94 million, the Nuremberg-based Federal Labor Agency said today. Economists forecast a decline of 10,000, the median of 31 estimates in a Bloomberg News survey showed. The adjusted jobless rate rose to 7 percent from 6.9 percent. A separate report showed factory output dropped. “It’s too early to call this a trend change in the labor market, but it shows that growth forces are weakening,” Lothar Hessler, an economist at HSBC Trinkaus & Burkhardt AG (TUB) in Dusseldorf, said in an interview. “The dynamism of the economic upswing is lessening more than thought.”

EU Pushes Papandreou on Greek Euro Vote as G-20 Leaders Meet (Source: Bloomberg)
European leaders urged Greek Prime Minister George Papandreou to swiftly spell out how he intends to stick to the terms of a bailout plan after he handed voters a veto over the week-old package. Crisis talks were under way in the French resort of Cannes on the eve of a Group of 20 summit after Papandreou was summoned by European counterparts to explain his call for a referendum that risks delaying aid the country needs to avert default. In Athens, Greek lawmakers debated a confidence motion that could bring down his government. The stewards of the euro “won’t accept” a break from last week’s agreement, Luxembourg Prime Minister Jean-Claude Juncker told reporters in Cannes. German Chancellor Angela Merkel said “we have to get to the point where we know exactly what comes next.”

Greece Will Be Told No Alternative to Budget Cuts as EU Races to Save Pact (Source: Bloomberg)
European leaders are set to tell Greek Prime Minister George Papandreou he has no alternative to the budget cuts imposed in a week-old debt-crisis strategy that they are racing to prevent from unraveling. Papandreou, his hold on power weakening, was summoned to Cannes, France, for emergency talks on the eve of a Group of 20 summit where he will hear from French President Nicolas Sarkozy that the “only way to resolve Greek debt problems” is through a deal hammered out in a six-day crisis-management marathon. German Chancellor Angela Merkel said today that policy makers “must bring calm to the euro.” Papandreou triggered the latest upheaval in the two-year- long crisis by abruptly announcing on Oct. 31 a parliamentary confidence vote and his desire to hold a referendum on the rescue pact. Global stocks, the euro and bonds of debt-strapped countries tumbled yesterday as concern of a disorderly Greek default mounted.

Euro Declines as EU Leaders Withhold Greek Aid (Source: Bloomberg)
The euro declined, trading 0.6 percent from a three-week low against the dollar, as European leaders said Greece will hold a referendum next month to determine whether it will stay in the 17-nation currency. The euro dropped for a third day versus the yen after French President Nicolas Sarkozy said Greece won’t receive a “single cent” in aid without holding to the terms of its bailout agreement. The dollar maintained yesterday’s slide against the Japanese currency as the Federal Reserve signaled a willingness to take further steps to support growth. New Zealand’s dollar dropped after the nation’s unemployment rate increased in the third quarter. “I can’t come up with a plan to allow Greece to leave the euro, not without experiencing intense capital flight,” said Robert Rennie, chief currency strategist in Sydney at Westpac Banking Corp., Australia’s second-largest lender. “I don’t think there’s anything here to make the euro bounce. The risks certainly point in the direction of weakness.”

MF Global May Have Transferred Customer Money After Audit, CME Group Says (Source: Bloomberg)
MF Global Holdings Ltd. (MF) may have transferred customer money last week following an audit by CME Group Inc. (CME), which has regulatory authority over the futures broker. The transfer “may have been designed to avoid detection in so far as MF Global did not disclose or report such transfers” to the Commodity Futures Trading Commission or CME Group, the Chicago-based exchange owner said today an e-mailed statement. The day it filed the eighth-largest U.S. bankruptcy on Oct. 31, New York-based MF Global disclosed a shortfall in customer accounts that people with knowledge of the matter said may be about $700 million. CME Group, which monitored MF Global’s positions as its designated self-regulatory organization, said yesterday it didn’t know how much client money was missing.